AQA A-LEVEL BUSINESS PAPER 1 REVISION QUESTIONS WITH CORRECT ANSWERS

AQA A-LEVEL BUSINESS PAPER 1
REVISION QUESTIONS WITH CORRECT
ANSWERS 2026-2027
Why businesses exist - correct answer-Can make you money and you can be your own boss



Mission - correct answer-
a business aim expressed to make it seem especially purposeful and motivating



Objectives - correct answer-SMART Specific, Measurable, Achievable, Realistic, Time-bound



Why businesses set objectives - correct answer-- it is motivating to have a goal to aim toward

- as a boss you can not make every decision



Profit - correct answer-Revenue - total costs



What are the 5 types of business - correct answer--sole traders

-private limited companies (LTD)

-Public limited companies (PLC)

-Private and public sector organisations

- non-profit organisations (charities)



Sole traders - correct answer-a business that is owned and operated by one person



Private Limited Company (Ltd) - correct answer-
A small to medium sized company, owned by shareholders who have limited liability. The company
cannot sell its shares to the general public.



Private Limited Company Advantages - correct answer--Limited liability

-Additional capital can be raised by selling shares (not to the general public)

,-Separate legal existence to the owner

-Higher business status to sole trader



Private limited company Disadvantages - correct answer--
You have to publish the account information

-You need two share of £1 each



Public limited company (plc) - correct answer-
A limited company with more that £50,000 of share capital. Any member of the public can buy sh
ares. Public companies must publish more detailed accounts



Public limited company Advantages - correct answer--Raising capital through public issue of shares

-Offering shares to the public spreads risk

-Banks are more likely to lend money to PLC's

-More growth and expansion opportunities

-Having PLC at the end of your business name gives a better image

-Shares are more easily transferred so shareholders are happier

-Separate legal entity to the owner



public limited company Disadvantages - correct answer--More regulations that could increase costs

-Higher level of transparency needed

-Must start with £50,000 share capital



Private sector organisations - correct answer-Organisations owned by individuals or companies



Public sector organisations - correct answer-Businesses owned by the government.



Non-profit organisations - correct answer-
Businesses with a motive other than profit, may be to provide a social benefit or service to societ
y or to support a cause.

,Share capital - correct answer-
The total value of capital raised from shareholders by the issue of shares



Role of Shareholders - correct answer-
to raise important issues with the board directors and raise funds



Why shareholders invest - correct answer--Annual dividend payments

-A rise in the value of shares



Market capitalisation - correct answer-Number of issued shares x current share price



Influences on the price of shares - correct answer--
The profit after tax of the company x the value investors place on on those earnings



Significance of share price changes - correct answer-
High = cheap and easy to obtain more share capital

Low = unlikely to raise any extra share capital



What are the 6 external factors affecting businesses - correct answer--Market conditions

-Competition

-Changes in household incomes

-Changes in interest rates

-Demographic factors

-Environmental issues



Market Conditions - correct answer--The number of competitors in a particular market

-The intensity of competitiveness

-Total market available

-The rate at which the market is growing

, Competition - correct answer- X 2 X 2 X 2




The tighter the economic and market conditions, the greater the competitive pressures tend to be
X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2




Factors that effect household incomes - correct answer--
X 2 X 2 X 2 X 2 X 2 X 2 X 2




Changes in the real income of the main income earn
X2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2




er

-The number of people in the household that work
X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2




-The impact of government decisions on taxation and benefits
X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2




Changes in interest rates - correct answer-
X 2 X 2 X 2 X 2 X 2 X 2




If interest rates go up, businesses and individuals spend less. If interest rates go down, busines
X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2




ses and individuals spend more.
X2 X 2 X 2 X 2




Demographic factors - correct answer--Population size X 2 X 2 X 2 X 2 X 2




-Age

-Gender

-Ethnicity



Environmental issues and fair-trade - correct answer- X 2 X 2 X 2 X 2 X 2 X 2




Concern for green issues and ethical issues involved with business.
X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2




What do managers do - correct answer-
X 2 X 2 X 2 X 2 X 2 X 2




Set objectives, organize, motivate and communicate, measure, develop people
X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2




What are the leadership styles - correct answer--Autocratic managers
X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2




-Democratic managers (laissez-faire) X 2 X 2




-Paternalistic



Autocratic managers - correct answer- X 2 X 2 X 2 X 2




Managers who centralise power and tell employees what to do. They tend to use one-
X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2 X 2




way, top- down communication.
X 2 X2 X 2